The Chinese government officially announced a plan to provide governmental subsidy which encourages ship demolition on December 9 and cleared its policy to support domestic shipping and shipbuilding industries.

Jointly released by four governmental departments (the Ministry of Transport, the Ministry of Finance, National Development and Reform Commission, the Ministry of Industry and Information Technology), this policy is applied in China-flagged ships and Chinese operators who send old vessels to scrapping facilities with placing new orders for eco-ship will receive CNY 1,500 (around $247) per ton (GT).

To take advantage of the policy, ship age needs to be within 10 years distant from demolition required age and shipowners will take the governmental subsidy split half and half in twice upon demolition and newbuilding delivery.

In addition, a newly ordered vessel needs to be larger than a demolished vessel in gt terms.

The subsidy policy will be implemented till late 2015.

Meanwhile, the demolition subsidy is considered to be a part of measures taken by the Chinese government to support domestic shipbuilding industry and industry watchers expect that various supporting plans will follow, including preferential treatment on tax towards compatriot operators and shipbuilders.